Are Auditors\u27 Going-Concern Evaluations More Useful after SOX?

Bankruptcy risk is a crucial factor in auditors’ decisions whether or not to modify their audit opinion based on the going-concern assumption. SOX required more extensive audit procedures than those required before its passage. More extensive audit procedures should result in more meaningful audit reports. This study examines whether the auditors’ going-concern opinion provides more useful incremental information after SOX than before SOX in distinguishing between distressed companies that become bankrupt in the next year and those that do not. We find that an audit opinion variable adds more useful information to bankruptcy prediction models after SOX than before SOX. Our findings provide evidence that financial statement users have derived benefits from the costly procedures required under SOX

The Incremental Usefulness Of Income Tax Allocations In Predicting One-Year-Ahead Future Cash Flows

Interperiod income tax allocation has been a hotly debated financial accounting issue for a long time.  Critics of interperiod tax allocation frequently question the usefulness of the extra information, particularly considering the FASB’s decision usefulness approach stated in its Conceptual Framework.  This study extends the research of Cheung et al. (1997) and Krishnan and Largay (2000) by using the ability to predict future taxes paid and future cash flow as criteria to evaluate the usefulness of interperiod tax allocation. This study extends previous research by examining not only whether interperiod tax allocation included in financial statements is useful, but also by examining whether such information is incrementally useful beyond taxes paid. For predicting future taxes paid and operating cash flow, our analyses provides little evidence that interperiod tax allocation information included in financial statements adds incremental predictive value beyond taxes paid as reported on the cash flow statement

Loan Officer Confidence, Continuous Reporting, And The Loan Approval Process

This study explores the issue of loan officers’ confidence in making loan approval decisions across different loan monitoring types. Loan officers were asked to assign loan approval probabilities given a traditional loan monitoring capability or a continuous reporting capability. We find that the higher the level of confidence the loan officer had in his/her loan approval decision, the higher the loan approval probability assigned to the loan application.  However, that effect was not consistent across monitoring types (traditional vs. continuous reporting). Our results suggest that loan officer confidence only impacts the loan approval probabilities for the traditional monitoring cases. Confidence did not significantly influence loan approval probabilities for the continuous reporting cases; although, the loan approval probabilities for the continuous reporting, low confidence cases exceeded 50 percent

A Research Note On The Issue Of Non-Articulation And The Method Used To Calculate Net Operating Cash Flow

Using a proxy for nonarticulation, prior researchers found evidence that many companies using the indirect method of reporting net cash flow from operations have a significant level of nonarticulation.  The purpose of this study is to determine if companies using the direct method of reporting net cash flow from operations experience significantly lower levels of nonarticulation than companies that use the indirect method of reporting net cash flow from operations.  Results show that companies using the direct method have significantly less nonarticulation than companies using the indirect method.  This finding suggests that the Financial Accounting Standards Board (FASB) should consider requiring companies to use the direct method of preparing the Statement of Cash Flows

A Research Note On The Issue Of Non-Articulation And The Method Used To Calculate Net Operating Cash Flow

Using a proxy for nonarticulation, prior researchers found evidence that many companies using the indirect method of reporting net cash flow from operations have a significant level of nonarticulation. The purpose of this study is to determine if companies using the direct method of reporting net cash flow from operations experience significantly lower levels of nonarticulation than companies that use the indirect method of reporting net cash flow from operations. Results show that companies using the direct method have significantly less nonarticulation than companies using the indirect method. This finding suggests that the Financial Accounting Standards Board (FASB) should consider requiring companies to use the direct method of preparing the Statement of Cash Flows

An Empirical Look At Developmental Interventions And Student Performance In The First Intermediate Accounting Course

Due to concerns about student performance in Intermediate Accounting I, our Department of Accounting established an Intermediate Readiness Committee in the spring of 2006 to create a developmental program for students entering Intermediate I, with the goal of improving performance in that course.  Over the next two years, the Committee established the Developmental Program with two escalating interventions to improve performance in Intermediate I.  These interventions were comprised of readiness testing with study sessions and readiness testing with use of developmental software.  This study reports the impact these interventions had on student performance in Intermediate I.  The authors control for gender, grades earned in each of the two accounting principles courses, whether the student took Principles II at school of study or transferred the course credit from another school, and overall undergraduate grade point average upon entering Intermediate I.  Results indicate that each intervention resulted in significantly higher grades than observed in a Base Period without intervention

Enhancing Timeliness of Drug Overdose Mortality Surveillance: A Machine Learning Approach

BACKGROUND: Timely data is key to effective public health responses to epidemics. Drug overdose deaths are identified in surveillance systems through ICD-10 codes present on death certificates. ICD-10 coding takes time, but free-text information is available on death certificates prior to ICD-10 coding. The objective of this study was to develop a machine learning method to classify free-text death certificates as drug overdoses to provide faster drug overdose mortality surveillance. METHODS: Using 2017–2018 Kentucky death certificate data, free-text fields were tokenized and features were created from these tokens using natural language processing (NLP). Word, bigram, and trigram features were created as well as features indicating the part-of-speech of each word. These features were then used to train machine learning classifiers on 2017 data. The resulting models were tested on 2018 Kentucky data and compared to a simple rule-based classification approach. Documented code for this method is available for reuse and extensions: https://github.com/pjward5656/dcnlp. RESULTS: The top scoring machine learning model achieved 0.96 positive predictive value (PPV) and 0.98 sensitivity for an F-score of 0.97 in identification of fatal drug overdoses on test data. This machine learning model achieved significantly higher performance for sensitivity (p \u3c 0.001) than the rule-based approach. Additional feature engineering may improve the model’s prediction. This model can be deployed on death certificates as soon as the free-text is available, eliminating the time needed to code the death certificates. CONCLUSION: Machine learning using natural language processing is a relatively new approach in the context of surveillance of health conditions. This method presents an accessible application of machine learning that improves the timeliness of drug overdose mortality surveillance. As such, it can be employed to inform public health responses to the drug overdose epidemic in near-real time as opposed to several weeks following events

Fate of Libby Amphibole Fibers When Burning Contaminated Firewood

In Libby, Montana, over 70 years of mining amphibole-contaminated vermiculite has led to amphibole contamination in areas surrounding the abandoned mine and in other areas throughout the town. In addition to contaminated soils, tree bark has also been found to be contaminated with amphibole fibers throughout the Libby area. As residential woodstoves are the main source of home heating in Libby, the purpose of this study was to determine if amphibole fibers become liberated into the ambient air when amphibole-contaminated firewood is combusted. Amphibole-contaminated firewood was combusted in new, EPA-certified stoves during three trials. The results of these trials showed that the majority of the fibers remained in the ash following the combustion process, suggesting that additional potential exposures can occur within the homes to those that clean the ash out of woodstoves. The combustion trials also revealed that amphibole fibers can become liberated into the ambient air during the combustion process. Amphibole fibers were found impacted in the ductwork, as well as detected in wipe samples collected from an inverted container used to concentrate the woodsmoke emissions. These findings stress the need for identifying a clean fuel source for the inhabitants of Libby to prevent future exposures

Libby Amphibole Contamination in Tree Bark Surrounding Historical Vermiculite Processing Facilities

Over a 70-year period, a mine near Libby, MT supplied nearly 80% of the world’s vermiculite. Raw vermiculite, which was contaminated with naturally occurring amphibole in veins throughout the deposit, was shipped to processing sites throughout the United States for exfoliation. In this pilot study, tree bark samples were collected near processing facili-ties in Spokane, WA, Santa Ana, CA, Newark, CA, and Phoenix, AZ in an effort to determine if areas surrounding these facilities are today contaminated with Libby amphibole asbestos (AA). From areas surrounding each of the four his-torical processing sites, Libby AA was detected in a subset of the bark samples. At the Santa Ana, Newark and Phoenix facilities, actinolite-tremolite and other high Fe Ca-bearing amphibole were also measured from the bark samples. In addition, chrysotile was frequently measured in samples collected from each of the sites. From the results of this pilot study, it is evident that tree bark can serve as reservoirs of asbestos, and indicators of past and current contamination. These data also suggest that areas outside of these historical processing facilities may today have some level of existing contamination resulting from the operation of these facilities

TEDI: the TripleSpec Exoplanet Discovery Instrument

The TEDI (TripleSpec - Exoplanet Discovery Instrument) will be the first instrument fielded specifically for finding low-mass stellar companions. The instrument is a near infra-red interferometric spectrometer used as a radial velocimeter. TEDI joins Externally Dispersed Interferometery (EDI) with an efficient, medium-resolution, near IR (0.9 - 2.4 micron) echelle spectrometer, TripleSpec, at the Palomar 200" telescope. We describe the instrument and its radial velocimetry demonstration program to observe cool stars.Comment: 6 Pages, To Appear in SPIE Volume 6693, Techniques and Instrumentation for Detection of Exoplanets II